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State unemployment rate drops to 6.8 percent, as more Minnesotans stop looking for work

Minnesota's unemployment rate continued to decline in June, but likely not because a large number of unemployed people were able to finally find work.

The state's unemployment rate dropped to 6.8 percent June, down from 7.0 percent the previous month. But officials with the Minnesota Department of Employment and Economic Development said nearly 14,000 workers either stopped actively looking for work or otherwise left the state labor force, helping the unemployment rate fall.

The drop also came despite the fact that Minnesota lost 3,700 jobs during the month. DEED said the job losses were mostly a result of temporary U.S. Census jobs ending.

Officials said they don't know why some unemployed Minnesotans are no longer seeking jobs, which means the state doesn't include them in the labor force for statistical reasons. Others could have left the labor force as their families went from being a two-income household to a one-income household.

The state work force participation rate is now 72.2 percent, while the national rate is 64.7 percent.

"It's certainly I think reasonable to speculate that some of this nearly 14,000 person departure, has been driven by some discouragement," said Steve Hine, the state's labor analyst.

But Hine said it's easier to see that as a national trend rather than a Minnesota one. The state has gained some 17,000 jobs in the last two months, an encouraging sign for workers.

"I'm a little hard-pressed to sort of understand that," he said of the declining work force participation rate.

Still, Hine said, Minnesota has one of the highest work force participation rates. And the state's unemployment rate has dropped from 8.4 percent a year ago to 6.8 percent now, leading the nation, he said.

"No other state comes close to that level of decrease," Hine said.

Minnesota's unemployment rate remains well below the national rate of 9.5 percent.

Industries that showed job gains in June included leisure and hospitality with 5,100 jobs and financial activities, which added 2,300 jobs.

Job losses occurred in several industries, but the worst was trade, transportation and utilities with a loss of 3,200 jobs, mostly in retail. Manufacturing jobs were down 900, but Hine said he's not concerned about a one-month decline in that area.

McElroy said while Minnesota's economy hasn't recovered, he's starting to see more signs of a turnaround.

There are about 18,000 job openings on the state's job website, and on a recent trip to talk to people in other areas of the state, McElroy said an employer told him he was having a hard time finding enough qualified workers.

"That's the first time that's happened in a year and a half," McElroy said.